The 5 Questions Real Estate Consumers Are Curious About

This month’s market update from KCM gives us the:

5 questions consumers are curious about:

• When Will Mortgage Rates Come Down?
• What Will It Take for Prices To Come Down?
• Will I Be Able To Find a Home If I Move?
• Will The Housing Market Pick Up Next Year?
• Is the Market Going To Crash?

No one expects you to have a crystal ball, yet your prospects expect a fact-based point of view.  The narrative below is intended for that purpose. (DM me for the slides)

The highlights?

• The census, Fannie Mae, MBA, NAHB, NAR project a 13% increase in home sales in 2025.
• On a typical day in October, 29.2% more homes were actively for sale than at the same time in 2023, marking the twelfth consecutive month of annual inventory growth and the highest count since December 2019.
• The Altos Reports –  linked below – show how this trend is driving a more “balanced market” with a slight seller advantage in many markets.
  • National
  • California
  • Texas
  • Florida
  • New York
• Mortgage rates? A study conducted by the Bright MLS indicated that 70% of buyers in the last year abandoned their search because of affordability. The folks over at Altos seem to suggest an infliction point when rates get to 6% and below.
  • The consensus of Fannie Mae, MBA, NAR, and Wells Fargo below 6 and near 5.5%
  • Remember – Bond Yields: Mortgage rates often track the yields on 10-year Treasury bonds.
  • When bond yields rise, mortgage rates tend to follow.
  • I have a white paper on “Mortgage Rates and Bond Yields.” If you are interested, send me a direct message.
• The National Debt? A challenge for lower mortgage rates.
• Consumer debt is at record levels, yet home equity is also at record levels.
• The implication?
  • Historic equity – and a shortage of supply –  indicates a crash is not likely.

So what should we expect in 2025?

1. More homes to sell next year – at least 13% more (consensus)
2. Mortgage rates to decline below an infliction point
3. Price appreciation to slow – a consensus projection of around 2.5%
4. The unknown – institutional investors are holding on to a significant portfolio of residential homes – when will other investments create higher returns and an inventory sell-off?